Buy Bitcoin below 3,000

If Bitcoin prices drop below 3000, buy and hold for 30-90 days.

Any price drawdown (retracement from highs) of 30% to 70% will give an edge in profiting from the current general uptrend in prices. 

Bitcoin should be traded based on price tendencies, and not viewed as a buy-and-hold investment. Exit the trade when a profit of 50% is achieved.

30 day HPRs usually do not go beyond -20% since 2015 - any dip below 20% presents a decent chance for profit.

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When to buy Bitcoin

Investing in Bitcoin, though lucrative-sounding and greed-inducing, is difficult because of the volatility it exhibits.

I believe the intrinsic or fundamental value of Bitcoin is impossible to quantify and thus the question of whether it is a 'good buy' or a good 'investment' is irrelevant. In fact I don't view it as an investment because an investment should be one that has some justified basis of future returns (by its contractual nature etc).

It is possible though, to trade Bitcoin based on its historical price behaviour, and the assessment of public sentiment and its drivers. Currently sentiment is driven by advances / hindrances in regulation, and is less affected by events such as fraud, stability of exchanges, and its usage in illegal activities.

Despite its skyrocketing prices, Bitcoin in its recent uptrend (2015 onward) is actually growing at a less bubbly rate than its first wave in 2012-2014.

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FX Weekly – 2017 Week 38

Summary:

  • EURUSD fails to hold 1.20 region, though likely to see one more leg up to test and break new highs. Pattern is likely to be choppy, so it is possible to sell at new highs.
  • GBPUSD breaches post-Brexit area of 1.35, trajectory difficult to anticipate from here but trend remains bullish.
  • USDJPY reverses strongly from long term support area 107.50, bullish from here against 107.50.
  • USDCHF aimless.
  • AUDUSD no strong trend but structurally bullish with signs of weakness hinting at end of uptrend soon.
  • USDCAD is in the inverse position - no strong sign of a bottom
  • NZDUSD corrective leg up is expected to continue

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How past prices influence current prices

Context - one reason why fundamental analysis (FA) alone cannot be used to explain prices and why prices are not simply a random walk.

FA determines a stock price to be 80. That number is meaningful against current prices - e.g. if current price is 79, you should buy it.

However, all investors also use context as part of informational input in order to reach an investment decision. Context refers to where prices have been in the past, and comparing that to where they are now. It introduces the behavioural aspect of investing into the whole equation which ultimately results in price.

If the price is 79 now, but a month ago it was 180, would an investor still buy it for that $1 difference? Likely not. But what if over the year, prices were stable at 80-81? Likely investors would buy it.

Therefore, context introduces information into the equation through the expectations regarding risk and reward. It ultimately affects current prices as current prices are a result of the collective decisions of investors at that instant.